<p>this may seem simplitic. I believe my parents bought stocks and mutual funds in my son’s name. Rather, it was mom’s or dad’s social security #, for tax purposes, with son mentioned as beneficiary. My mom also bought lots of Israeli bonds. We didn’t know how much until they both died the year before son entered college (ughh–lost any hope of financial aid). </p>
<p>We are in the process of setting up irrevocable trusts for our children. If your parents are concerned about how some of the grandkids’ parents would handle knowing about this money, they should assign an independent trustee over those trusts. That way the parent has no say in how and when the money is disbursed.</p>
<p>They aren’t really concerned about how the money will be handled by the parents once they are gone. They are more concerned about the parents, one specifically, making financial decisions now based on knowledge of these funds. One of my sisters still has two kids under college age. She and her husband make good money, but spend a lot. My father is concerned that if they knew there would be all this money for the kids, they would stop saving for college and lead an even more lavish lifestyle. Again, before anybody else suggests this: there will be no need based financial aid for these kids. The parents make well into the six figures.</p>
<p>Do you really plan to use the SS numbers of these kids without their knowledge? </p>
<p>I think your parents are being very generous. It sounds like they have the resources to gift a significant amount. Spending some money on a trust expert lawyer would be money well spent in the big scheme of things.</p>
<p>^I agree. I don’t usually spend money on “experts”, either. But this may be the one time I would if it were me. Grandparents are gifting annual maximum to 15 grandkids. That’s distributing about half a million dollars every year until they pass away. Cost of talking to an expert will be peanuts in comparison.</p>
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<p>Spendthrift trusts (as I understand it) are used for situations that are exactly as you describe. </p>
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My mom got SS numbers for her grandchildren as soon as they were issued to buy savings bonds in their names and list them as beneficiaries on T-notes. Some of these we knew about and some were a surprise that we learned about when she turned over her financial affairs to my brother. No one was upset that their SS number was used to provide them with a surprise windfall.</p>
<p>^^ Thanks. I needed the support. Apparently some feel they know our family dynamics more than we do. Besides, my parents helped fund the college educations of all the grandkids so would have the numbers already. Even if I didn’t from doing their returns. Can’t imagine anybody getting upset about it although some here are very concerned and will make sure my parents are aware of your concerns.</p>
<p>I, too, have the social security numbers of my grandchildren. Freely given to me by my children. Even if I didn’t have them from doing their returns. I will be very careful with how I use those numbers. In case any of you are worried.</p>
<p>As for advising my parents about using a lawyer, estate planner or financial consultant. Duly noted. Again, will make sure my parents are aware of your concerns. Since apparently you think they value your advice more than mine.</p>
<p>Sure wish the savings bond option was still a possibility. Seems to be the easiest. Too bad the U.S. Treasury decided to make it harder for the older among us. </p>
<p>I wish there was someone secretly trying to give me money :-)</p>
<p>I don’t understand the problem with using the SS #s in order to give the kids a lot of money. If they were using them to open up secret credit cards or something to enrich themselves, that’s a totally different story. </p>
<p>3bm103, my close friend’s DH’s siblings are outraged that their parents left all their assets to the grandchildren in trust with my friend’s husband executor of the trust and the one who dispenses the funds as they meet certain requirements. They were all very close, and my friend and her husband are shocked at how much trouble this has caused the family They would have sworn that this would have never happened. </p>
<p>I have another friend embroiled in a suit against her sister and some other issues that are terriible, terrible All unexpected since everyone seemed to be so together on things. </p>
<p>If I were in the grandparents shoes I would give cash or checks directly. Then I would be able to see who handles the money wisely and who fritters it away. If one used the money on gambling or drugs or something equally reprehensible, at least then I would know and would likely write that person out of the will.</p>
<p>^^You asked for advice and are now belittling those who give it. You seem to want a way around paying taxes but also around letting anyone know what you are doing, and yet get mad at several posters who are just giving honest advice. Your parents can’t have it both ways. This isn’t 1940 and war bonds aren’t available. If they want to move the money now, there is a risk that some of your siblings will spend the money in a way that your parents don’t want them to, or at least spend their own money on luxuries since they know this money is there for education. Are they unaware that your parents have money? Did you not say that your parents have already paid for some of the educational expenses? Even Warren Buffet’s children know what he will pay for and what they can expect to inherit (he paid for education, they mostly will get nothing upon his death).</p>
<p>As said upstream, the IRS doesn’t like secrets. If your parents want to give the money now, then give it. Once given, it can usually be spent by the recipients because it becomes THEIR money. If your parents still want to control the money, then there are trusts, but they aren’t simple and you said your parents want simple. If they don’t actually give the money now, the risk is that it remains in their estate and will be taxed upon death. Heavily taxed if they have more than $5M. </p>
<p>The best suggestion is to get a tax and estates attorney. I have a friend who is a CPA and tax attorney, and he does these complicated things all the time. I referred a friend to him who had elderly parents with farm land and an otherwise large estate. She’d been working with a local attorney her parents had used for years and who seemed to screw everything up. After talking to Ed for an hour, she called and said “We’re switching to Ed!” Ed and his firm’s specialty is helping lottery winners deal with big windfalls and reduce taxes, and yes, preventing families from spending all the winnings. Specialists do exist, and they are worth the money, but tax and estate law is not simple, it’s complicated.</p>
<p>DO NOT put thousands of dollars into safety deposit boxes! Any funds in those wouldn’t be FDIC insured. In fact, make sure if your parents open multiple accounts at one bank that the naming on those accounts is correct and that the combined accounts are within FDIC limits so that each account is protected. There is about a $1M limit for any one depositor, but correctly naming the accounts should provide protection because of the joint ownership.</p>
<p>^Putting money in safety deposit boxes won’t help in term of estate taxes. If you have control over the money, you have not “gifted” the money as far as IRS is concerned.</p>
<p>“Better call Saul”. I made the safe deposit box suggestion somewhat in jest. The idea of secret money just invoked images of gangsters toting around their bags of cash. Europeans still have a fondness for cash, and the Swiss only recently “closed the vault” on secret accounts. </p>
<p>Personally I think the estate tax exemption of $5.3 million per person is extraordinarily generous of our government, except perhaps in the case of family business owners. </p>
<p>I heard a byline on the topic of inheritances on NPR. They focus on black families, but the topics are universal.</p>
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<p><a href=“https://onpoint.wbur.org/2014/12/16/inheritance-will-estate-planning-black-heirlooms”>https://onpoint.wbur.org/2014/12/16/inheritance-will-estate-planning-black-heirlooms</a></p>
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The advice I wanted was a way to gift money to a grandchild without their knowledge. The advice I didn’t ask for was whether people thought this was a good idea or not. Especially since I tell them why and they still keep insisting what a terrible idea it is even going as far as suggesting that there is something underhanded about using the ss numbers without their knowledge.</p>
<p>They aren’t looking for a way out of paying taxes. Gifting has been available forever and there is nothing illegal or immoral about it. It is a legitimate method of reducing the size of the estate. To my knowledge bonds are way more recent than 1940 since we have some in my son’s name and he was born in 1985. Actually, bonds are still available. You just have to buy them online. Not easily done by those in their late 80’s. </p>
<p>My parents have every right to do with their money what they want as long as it’s legal. I have offered them my suggestions and advice but could not think of another way to do it besides the Savings Bonds that are no longer an option. I now understand that there is no other option. All people had to do is say that not insinuate that we are trying to get away with something.</p>
<p>Any chance some municipal or state bonds will become available in your place of residence? Would buying those types of bonds for the grandchildren work for the purpose you are outlining? We had municipal bonds…only thing is…we did get an annual statement about their interest. Not sure how to deal with this if no one is to know about this until after the grandparents die.</p>
<p>Being fiscally responsible and “getting away with something” are not the same thing. </p>
<p>IMHO, the “secret” part does bother some people, in that it complicates the answer tremendously. Not that being secret is bad, it just makes things more difficult.</p>
<p>I would not bet for a minute that there is “no other option”. But that’s what lawyers are for, and if we are talking more than a hundred thousand dollars total, I don’t see how retaining a lawyer would be a bad idea. They gotta eat too (and they will eat once your parents have passed and their estate is distributed).</p>
<p>When my aunt passed, her lawyer who helped her draw up her will was the lawyer for the estate as well, and it made life a lot easier. I would think there would need to be transfer now or in the will, period. I don’t see any other choice for that. And now would be difficult to do secretly.</p>
<p>I find this interesting:
<a href=“http://christianpf.com/giving-secret-gifts/”>http://christianpf.com/giving-secret-gifts/</a></p>
<p>(I’m an atheist, so no religious intent meant, just interesting in the points it makes)</p>
<p>One more consideration. Just sayin’. I know you’re done listening to me but I gotta say it.
So how many kids belong to each sib? So the money is going to the grandkids rather than sibs. So if I had more kids I get more money in my family. Or maybe my kids education (under different tax laws) has been paid for already so the money is gravy to my kids. Whereas GPs are worried other kids college isn’t being saved for. What if I didn’t have kids? or maybe one and sib has four kids?<br>
You can say “Oh well…them’s the breaks. It’s their money.” And I get it–but that’s the kind of stuff that tears the best families apart. Even the good ones. Even the ones who don’t need the money. Even the ones who’ve been cooperative for 30 plus years. And you’ll be in the middle of it. You asked for economic advice but you’ve gotten some family type advice which you think won’t apply to you but money can be a deal breaker for the best of relationships. It happens WAY more often than you think. And you never think it will happen to you. But here’s hoping you are totally right!</p>
<p>Agree that money does sad things to a lot of relationships and the estate attorneys are very careful to be upfront about the issues that they have seen and advise the best ways they know to help minimize them. It is sometimes a nice thing that so much goes to charity and the heirs don’t have much to squabble over. We keep telling my folks to please spend it all and enjoy life!</p>